Our opinion on the current state of BALWIN(BWN)Balwin Properties (BWN) is a South African developer focusing on secure sectional title properties, recently diversifying into renting out properties to generate a more stable income stream. The company is leveraging solar power and internet fiber installations to add value to its developments. Initially listed at R10 per share, it now trades around 270c. Given the significant challenges in South Africa's property market due to tough economic conditions and a recession, Balwin’s move into rentals could provide steady income to offset fixed costs and contribute to profitability.
Balwin holds 25% of Balwin Rental, which has the option to purchase up to 4544 units developed by Balwin, helping stabilize revenue. The company is also expected to list Balwin Rentals eventually. A significant project for Balwin is the Mooikloof Mega City, a R44 billion public-private partnership aimed at the gap housing market (for those earning between R3,500 and R22,000 per month). Launched on 4th October 2020, this project initially boosted Balwin’s share price by 13%.
In the six months to 31st August 2024, Balwin reported:
- Revenue down 28%
- Headline earnings per share (HEPS) down 57%
- Net asset value (NAV) rose 3% to 875c per share
The company cited high interest rates as a significant pressure on the residential property sector. Technically, the share had been in a long-term downward trend but broke upward through its trendline on 27th September 2024 at 218c per share and has since moved up to 245c. Trading at 28% of its NAV, the share appears undervalued, and Balwin could see continued recovery as the broader economy stabilizes.
